An increase in autonomous consumer expenditure causes the equilibrium level of aggregate output to ________ at any given interest rate and shifts the ________ curve to the ________, everything else held constant
A) rise; LM; right
B) rise; IS; right
C) fall; LM; left
D) fall; IS; left
B
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The response of investment spending to an increase in the government budget deficit is called
A) private dissaving. B) expansionary investment. C) income minus net taxes. D) crowding out. Figure 21-5
If the income elasticity of a particular good is negative 0.2, it would be considered
A) a superior good. B) a normal good. C) an inferior good. D) an elastic good.
The Federal Reserve can succeed in reducing unemployment by increasing the money supply to stimulate spending. In which of the following scenarios would it most likely refrain from implementing that policy?
a. when there is a significant slowdown in the economy and the Federal Reserve does not want to cause a shock b. when the economy is close to full capacity and the Federal Reserve does not wish to risk causing inflation c. when unemployment is in the double digits and firms are resistant to hiring more workers d. when consumers seem resistant to spending because so many of them are out of work
The optimal level of crime control is achieved where
A. the police officers' association is satisfied. B. the marginal reduction in the expected cost of crime equals the marginal cost of prevention. C. the total reduction in the expected cost of crime equals the total cost of prevention. D. the average reduction in the expected cost of crime equals the average cost of prevention.